Is buying a home right for you? The answer, despite what you might assume, isn’t always “yes.” But oftentimes buying a home is not only a good idea for personal reasons, but also an excellent way to build wealth for the future.
The more you know about the reasons to buy, the more comfortable you’ll feel taking the plunge. It’s important to remember that there are some advantages that don’t show up on a spreadsheet, such as pride of ownership and a sense of stability.
And don’t discount the ability to change things—repaint, knock out a wall, redesign the garden—without asking a landlord’s permission and without throwing the cost of the home improvement down the drain.
Here are a few tangible and less-tangible reasons to buy:
Pride of Ownership
“Pride of ownership” might sound like a squishy reason to buy a home, but it is one of the main motivators for home purchases.
Not only is home ownership about the joy of grasping the American Dream, it’s the satisfaction that comes from being master of your own domain. Feel like painting all the walls lime green? Go ahead! Thinking of installing a solid-gold bathtub? No one’s stopping you!
Any renter who’s been summarily kicked out when the landlord wanted to sell or renovate or move in himself will know that renting has some serious drawbacks in the way of stability.
Owning a home, alternately, provides real security. Unless you fall behind on your mortgage, no one can force you to leave. And your family can rest easy knowing they’ll be in the same place for years to come.
Over the long term, real estate remains one of the best investments, as it consistently appreciates over the years.
While the idea of a home as a piggy bank has justifiably lost its hot air lately, there is still a lot to be said for home-owning as a method of building wealth. If nothing else, a home investment can be viewed as a hedge against inflation.
Tax rates favor homeowners, and mortgage interest is deductible on your tax return as long as the balance of your mortgage remains smaller than the price of your home.
This is a major advantage, since interest makes up the lion’s share of your mortgage payments. Additionally, real estate property taxes paid for a first home or a vacation home are deductible for income tax purposes.
Part of your monthly mortgage payment goes to your principal balance, which reduces your debt and builds equity in your house. You’re working toward purchasing something that will retain and hopefully increase its value.
Homeowners can borrow against a home’s equity, which gives the average person a great amount of leverage to pay for big expenses such as home improvement, children’s education, and medical expenses. Consumers might find even it smart to use home equity to pay off credit card or other high-interest debt.